Before Raghuram Rajan joins the Reserve Bank of India as its new governor, he would deliver new parameters to measure backwardness among Indian states, key to meet UPA’s new friend Bihar chief minister Nitish Kumar’s demand for special status.
The committee is finalising ranking of the states on backwardness index which could be used by the central government to allocate funds depending on backwardness. The index will also help the central government to take a call whether states such as Bihar, Orissa and Rajasthan can be declared special category states on the basis of their backwardness.
Both Kumar and Orissa chief minister Naveen Patnaik had held rallies in Delhi demanding the status which translates into higher fund flow to the states for development. The UPA government had assured Kumar of looking into his demand and had constituted the Rajan committee in this May.
Official sources said that the committee would be finalizing its report by end of the coming week detailing the new parameters to decide backwardness. Apart from poverty and deprivation levels, the committee has considered other vital aspects such as access to sanitation, roads and regular electricity as define backwardness.
It has also examined quality of education, difference in a particular state’s per capita income as compared to national average and change in human development indexes over a period of time to arrive at new criteria. “The new parameters are based on series of indicators derived from different sources,” an official said.
Bihar is said to be high on lagging on several development indicators and this may give boost to Kumar to renew his demand for special category status.
Finance minister P Chidambaram in his budget speech had announced that the government would have new parameters to define backwardness for fund allocation under the Backward Regions Grant Fund (BRGF), the central scheme to address regional development imbalances. The BRGF started in 2007 has two components - district covering 250 districts and special plan for Bihar and KBK (Kalahandi- Bolangir-Koraput) in Orissa.
A big change the committee would recommend is providing financial incentives in BRGF for better performing states and disincentive for those who fail to meet an expected level. “The governance for backward regions has to be dynamic. One cannot allow a region to permanently remain backward as compared to national development just to get money from the Central government,” an official said.
The committee is likely to suggest review of backwardness index every five years and improve quality of data collection to measure the gains in regions under BRGF as compared to national average.